The year has kicked off to a positive start for property market, says Seeff
THE ARRIVAL of 2010 and the much anticipated World Cup together with the first signs that South Africa is moving out of recession bode well for the country’s beleaguered property sector over the next 12 months, says Samuel Seeff, chairman of Seeff Properties.
A “cautiously optimistic” Seeff believes this year will bring good news – increased demand for property, more sales, and conservative price increases.
“We will see more activity and more demand which will translate into more sales provided that banks keep their doors open to providing more finance,” he says.
Looking back, Seeff says from June 2007 the property sector had had two years of bad news. The fallout from the National Credit Act and more stringent lending criteria, continued hikes in interest rates, rising inflation and the escalating effects of the global financial crisis during 2009 all contributed.
“Demand for housing slumped to low levels and prices dropped. This all affected liquidity and confidence and, as such, sentiment. The market reacts to sentiment. People are reluctant to make long-term commitments,” he says.
During last year’s economic crisis, banks tightened up on lending, demanding larger deposits and granting fewer and fewer loans, which had had an extremely negative effect on sales, according to Seeff.
As a result, the full impact of interest rate reductions that began in 2008 and continued to August 2009 are yet to be felt.
He says the initial interest rate cuts took about five months to begin to filter down into the market. Activity levels and turnovers remained way off those recorded during the property boom of three years ago and positives are yet to increase buyer activity to the point where there is no longer surplus stock.
Only once demand exceeds supply can we expect a rapid increase in property prices.
Until that happens, growth will be minimal, he says.
“Overall, we believe the World
2010 will bring more activity resulting in more property sales
Cup will have a positive effect on sentiment rather than actual sales. The real effect may only be felt in 2011. By placing South Africa in the spotlight, the event will open up the country to potential investors and buyers who cannot help but recognise that there is significant value in the cosmopolitan lifestyle we offer, when compared to European destinations.
“Luxury homes and villas in the world-renowned areas of Camps Bay, Bantry Bay and Clifton, as well as apartments and penthouses at the equally enviable V&A Waterfront still offer outstanding value for the many overseas visitors who find South Africa an appealing holiday destination. We have just sold a Camps Bay villa for the highest price ever fetched in that area, to a European executive. He was in Cape Town for the draw last year, looking for somewhere to rent for the duration of the tournament. On experiencing Cape Town for a few days, he decided to buy here instead.”
Seeff says coastal property gems are not restricted to the platinum strip – you can buy a four-bedroom mansion alongside the links at Sunset Beach on the western seaboard coastline, which offers postcard views of Table Mountain and the ocean, for between R10 and R12 million. And equally outstanding homes are to be found in the coastal towns of Hout Bay and False Bay.
Seeff says that in July, Seeff Properties recorded its best perfor- mance year on year since March 2008.
“The group’s July 2009 sales figures were up 30 percent from July 2008. This performance proved sustainable and turnover increased by 107 percent in October 2009, when 133 percent more units were sold than during October 2008.
“With increased sales activity and banks easing up on the loan to value criteria, the property market will be a lot stronger this year,” Seeff says. “One real positive that has emerged from all the negativity is that buyers and sellers have become more aware of property market conditions and the true value of their assets.”